Major cities across the world such as Amsterdam, San Francisco, Sydney, Auckland are experiencing a serious spike in house prices. According to the Economist, house prices in 22 cities monitored rose by 34% in the past five years. In seven cities, that rate was over 50%.
What is driving the spike?
One of the reasons for this spike is due to rebound from the global financial crash. The last five years has seen a resurgence. The price in Dublin and San Francisco dropped by 62% and 42% respectively. Since then, the prices have increased by an average of 56%. In 14 cities, the prices are up by an average of 46% in comparison to the pre-crisis peak.
The house prices over the past 20 years in nations like Canada, Australia and New Zealand have on an average risen up 40% more in comparison to income. There is now a drastic difference in the increase in pricing in major cities than nationally. According to the Economist houses are 65% overvalued in Vancouver, while in other cities like Sydney, Amsterdam, Copenhagen, that rate is around 50%. In London, it is 50%. In only four cities, and i.e. Singapore, Tokyo, Milan, and New York, the rate is underpriced or fairly priced.
However, the index suggests the turning point in terms of property pricing. The average inflation rate in across 22 cities has slowed down from 6.2% to 4.7%. In six cities, the price has recently fallen from a recent spike.
